Pandemic Relief and Paycheck Protection Program

After months of stalling, weeks of fierce negotiations, and too many false starts to count, a new bill was passed at the end of December to help businesses and individuals across the country find relief from the economic devastation created by the COVID-19 pandemic. The Consolidated Appropriations Act, 2021 includes funding earmarked for small business loans, including a new round of the Paycheck Protection Program (PPP).

As a refresher, PPP was established last spring under the CARES Act, and the additional funding will enable a second draw for those who have already received a PPP loan and meet certain criteria.

The rescue package also includes a few provisions that may affect you or your employees:

  • Vaccine distribution funding
  • $600 direct payments to adults and dependent children who meet income criteria
  • An extra $300/week in unemployment benefits through at least mid-March 2021
  • $325 billion in small business aid
  • $284 billion in funding allocated to additional PPP
  • SBA 7(a) and 504 Microloans providing up to 8 months of forgivable principle and interest payments
  • Emergency rental relief

The biggest news for dentists is all about the Paycheck Protection Program.

First, the Act clarifies that PPP borrowers will be able to deduct expenses paid for with forgiven loans, clearing up a potentially nasty tax issue.

Second, forgiveness for loans under $150,000 have a new, simplified one-page application. Hooray!

Finally, Congress included another round of relief for small business owners by extending the Paycheck Protection Program with another $284 billion in forgivable loans.

While guidance from the SBA is yet to be released, it appears these loans will have the same terms as the original PPP loan.  Perhaps the biggest change for dentists is that to be eligible for a second PPP loan you must show a 25% (or more) reduction in gross receipts from any quarter in 2020 relative to that same quarter in 2019.  While the vast majority of dental practices experienced a 25% quarterly decrease in revenue; there are a few practices that will be disqualified because of this requirement.

Unfortunately, a timeline for when these loans will be available to businesses is still unclear.  The SBA is supposed to issue specific program guidelines and guidance for implementation today, so theoretically, banks could begin accepting applications this week. However, in April the SBA missed the deadline and was 4 days late issuing guidance. There is also the possibility that the SBA will strive for having complete rules (i.e., no rolling guidance) and better educating lenders on the rules, thus preempting some of the hiccups last time around. This could delay accepting applications by a few days or weeks.  Hopefully we’ll know more later today.

The other program that may be of interest to some dentists, particularly those with plans to purchase or expand a practice, are the Section 7(a) and 504 Microloans. While these have been in existence for many years, what’s new is that if you get a new Section 7(a) or 504 Microloan before Sept. 20, then your first six months of principal and interest (up to $9,000 a month) will be forgiven.

If you have questions about how these programs might benefit you, we’re here to help. Please don’t hesitate to schedule a call.

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